Branson's
Next Big Bet
Richard Branson, entrepreneurial icon, shares
his freshest ideas - like a Virgin superfuel that
will let us jet around the world guilt-free.
Business 2.0 Magazine
By Carleen Hawn, Business 2.0 Magazine
October 2 2006

(Business
2.0 Magazine) -- Business 2.0 Magazine has identified
the Best business ideas in the world. This is
the first in a series that will appear here throughout
the next month. Check back daily for updates.

Where
others see disaster, Richard Branson sees opportunity.
The founder of Virgin Group has business interests
on six continents, including airlines, express
trains, and limousine services, so his company's
contribution to global warming worries him.

But
instead of wringing his hands, Branson sees a
new fortune to be made in reinventing the fuel
business, much the way he's made over air travel,
credit cards, health care, and more.

He's
investing in conventional ideas like ethanol plants
and solar power, but he's also developing a formula
for a new ultraclean fuel that can power his jets
as well as cars and trucks.

What
we love about Branson is that he's part Warren
Buffett, part P.T. Barnum. Not every idea he's
dreamed up has panned out: Virgin Cola bombed
in the United States, and the irresistibly named
Virgin Brides retail chain is down to one lonely
store in Manchester, England.

Still,
Branson remains an unflappable inventor and promoter.
On a brief landing in the States between launching
a cell-phone carrier in South Africa and promoting
a rock concert in Toronto, he sat down with Business
2.0 to explain how he keeps coming up with new
ideas.

What's
the next big thing?

I
used to be skeptical of global warming, but now
I'm absolutely convinced that the world is spiraling
out of control. CO2 is like a bushfire that gets
bigger and bigger every year.

All
of us who are in a position to do something about
it must do something about it. Because Virgin
is involved with planes and trains, we have even
more responsibility. So we've put aside quite
a lot of money to invest in alternative fuels.
Over the next four years, we'll invest something
like $1 billion in alternative fuels.

The
money is going into a whole series of different
things like building ethanol plants. We're looking
into wind power. We're looking into solar. And
we're also actually working on developing a new
kind of fuel, which I can't say much about but
which is quite exciting.

So
we'll be pumping Virgin Fuel?

It
will be called Virgin Fuel, yes! It's not ethanol-based
as such, but it'll be a clean fuel. And if we've
got it right, it could be a very important breakthrough.
We think this fuel will work in cars and trucks
and trains within a year. And we're hoping that
it might work in commercial jet engines within
five years, possibly sooner. So it will be able
to work in Virgin Atlantic planes one day.

But
it's not just that we thought we should do this
to try to save the world and the thousands of
species that could die if we don't do it. Unless
you can generate cash, it's not going to be successful.
With oil prices above $70 a barrel, people want
to save on the cost of fuel, and so alternative
fuels suddenly make business sense.

Some
of your latest ventures, like an Indian comics
and animation studio and the Virgin Galactic spaceship
line, seem far afield of what you've done in the
past. How do you decide what to invest in next?

I
honestly invest in things that interest me or
in things that I want. The reason I moved into
the airline business was that I flew a lot of
other airlines and I hated the experience. I felt
we could create an airline that people wanted
to fly, and that turned into Virgin Atlantic Airways.

But
we made it with a difference: We straightaway
started with sleeper seats. We put stand-up bars
in the plane. We introduced, years before anyone
else, seat-back videos for economy and business
class, and we had manicurists and masseuses on
the planes.

Manicurists.
Where'd you get that idea?

That
I got from my wife's manicurist. People come to
me or e-mail me every day with great ideas. I
get hundreds of them - you can send me one on
www.virgin.com. I listen a lot, and eventually
something sticks.

And
why space travel now?

NASA
has always looked at it as a government-run research
program - never thinking of it as human beings,
individuals wanting to go into space. We think
there are millions of people who'd love to go
into space, and why shouldn't they have that experience?

Ten
years ago I thought, "Right, how can Virgin
be the first company to send people into space
commercially?" Then we went out talking to
every single person in the field, so that we'd
learn the ins and outs of space travel. By the
time Burt Rutan had his breakthrough, we were
there. We were the first on the scene.

Likewise
with clean fuels; it was exactly the same. We
went out and we registered Virgin Fuels, we went
out and talked to every scientist developing clean
fuels. And when there were breakthroughs, we were
the first on the scene. So we immerse ourselves
in things we are interested in and make sure that
nobody gets there before us.

Having
an idea is one thing. Having a successful business
is another. With more than 200 startups under
your belt, what advice would you give entrepreneurs
on making an idea stick?

I
made and learned from lots of mistakes. In the
end, the key is willpower. It's just really hard
work to make sure you can keep paying the bills.
But I do think one can have too much respect for
bank managers.

When
we entered the airline business, the very first
plane Boeing (Charts) sent over to us ran into
a bunch of birds and lost an engine. Because it
hadn't been delivered yet, the insurance didn't
cover that, so we were $1.5 million down before
we flew our first flight, which took the whole
Virgin Group beyond its overdraft facility.

Two
days later, as I returned from the inaugural flight,
our bank manager was sitting on my doorstep and
telling me that he's going to foreclose on the
whole business if we don't get the money in by
Monday - and that was a Friday.

So
I had to scurry around like mad over the weekend
to try to get enough money to cover what I owed,
which I just managed to do. For most people, bank
managers are a bit like doctors - they never leave
them because they have too much respect for them.

By
daring to be disrespectful, we went from having
a $5 million overdraft facility to having a $40
million overdraft facility with a different bank
by the end of that week. Where one bank was willing
to ruin us based on the assets we had, another
bank was willing to give us more credit.

There
is a very, very thin dividing line between survival
and failure. You've just got to fight and fight
and fight and fight to survive.

What
was the first business idea you came up with?

I
set up this magazine called Student when I was
16, and I didn't do it to make money - I did it
because I wanted to edit a magazine. There wasn't
a national magazine run by students, for students.
I didn't like the way I was being taught at school.
I didn't like what was going on in the world,
and I wanted to put it right.

Of
course, a lot of businesses want to reach students,
so I funded the magazine by selling advertising.
I sold something like $8,000 worth of advertising
for the first edition, and that was in 1966. I
printed up 50,000 copies, and I didn't even have
to charge for them on the newsstand because my
costs were already covered.

So
I became a publisher by mistake - well, not quite
by mistake, because I wanted to be an editor but
I had to make sure the magazine would survive.
The point is this: Most businesses fail, so if
you're going to succeed, it has to be about more
than making money.

Are
you saying entrepreneurs should go into business
without the bottom line in mind?

Ideally,
since 80 percent of your life is spent working,
you should start your business around something
that is a passion of yours. If you're into kite-surfing
and you want to become an entrepreneur, do it
with kite-surfing.

Look,
if you can indulge in your passion, life will
be far more interesting than if you're just working.
You'll work harder at it, and you'll know more
about it. But first you must go out and educate
yourself on whatever it is that you've decided
to do - know more about kite-surfing than anyone
else. That's where the work comes in. But if you're
doing things you're passionate about, that will
come naturally.